Kentucky has just made a significant breakthrough in the field of cryptocurrency by officially passing House Bill 701, a law protecting the right to self-custody Bitcoin and cryptocurrencies for its residents. This means that Kentucky residents can have full control over their digital assets without the fear of legal interference.
Moreover, the new law confirms that cryptocurrency mining and staking activities are not considered securities, thus exempting these activities from state financial intermediary regulations.
Self-Custody of Cryptocurrency – Freedom But Also Full of Risks
Self-custody is the way users control their private keys instead of relying on a third party to manage them. This is like keeping cash in a wallet rather than depositing it in a bank.
While it offers absolute freedom, this method also carries many risks. A prime example is the case of a man in Wales who spent 12 years trying to obtain permission to excavate a landfill to recover a hard drive containing 8,000 Bitcoins, currently valued at $696 million.
However, the Kentucky government still wants to ensure that if people choose to take risks, they also have the legal right to do so.
Law Receives Absolute Consensus
House Bill 701 received absolute support from both the House (91-0) and the Senate (37-0) of Kentucky before being signed by Governor Andy Beshear on February 28. This is a positive signal indicating that the Kentucky government is serious about promoting the development of the cryptocurrency industry.
With this new law:
✅ Local governments cannot issue regulations that discriminate against the crypto mining industry.
✅ Mining and staking activities are not considered securities.
✅ Operating blockchain nodes and staking will not be regulated under financial intermediary laws.
Kentucky Is Considering Establishing a Crypto Reserve Fund
Not stopping at House Bill 701, #Kentucky is also considering House Bill 376, an ambitious proposal to establish a crypto reserve fund for the state.
If passed, this bill would allow Kentucky to invest up to 10% of the state's surplus reserves into digital assets with a market capitalization of $750 billion or more.
Many Other States Are Also Considering Bitcoin
Kentucky is not the only state interested in Bitcoin. Currently, 19 states in the U.S. are having legislative discussions about cryptocurrency, with many states proposing to allocate part of the public fund for investment in crypto:
Utah: On January 28, this state passed a law allowing the state treasury to invest up to 5% of the public fund into digital assets with a market capitalization over $500 billion within the past 12 months.
New Mexico: On February 4, Senator Anthony L. Thornton proposed the Strategic Bitcoin Reserve Act (#SB275 ), allowing 5% of the public fund to be allocated for investment in Bitcoin.
However, not all states agree with this idea. Montana, North Dakota, Wyoming, and Pennsylvania have rejected efforts to convert tax revenue into Bitcoin.
Conclusion – Is Bitcoin Being Legalized in the U.S.?
Kentucky's passage of House Bill 701 is an important milestone, showing that the trend of supporting cryptocurrency is spreading across the U.S.
Although many states still show caution, with more states recognizing the right to self-custody and considering investment in Bitcoin, are we witnessing a major shift in the U.S. financial system?